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IRS warns of Tax Preparer Fraud

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Heading into tax season, the Internal Revenue Service has published a warning regarding tax preparer fraud. The Service cautions taxpayers to be wary of claims by preparers that offer larger refunds than other preparers, and reminds that tax evasion is a felony, punishable by five years imprisonment and a $250,000 fine.

January 20, 2005
Author: Cort Christie

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Some suggestions:

  • Avoid preparers who base their fee on a percentage of the refund.
  • Use a reputable tax professional who signs your tax return and provides you with a copy for your records.
  • Consider wither the preparer will be around in a few months or years to answer questions about your return after it has been filed.
  • Don’t sign the return until you understand all the entries.
  • Never sign a blank tax form.
  • Check on the preparers credentials.  There are several different levels of certified expertise, starting with an Accredited Tax Preparer, an Enrolled Agent, a CPA, a Licensed Public Account, and a Tax Attorney.  Only CPAs and Enrolled Agents may represent you before the IRS in all matters.  Other preparers may only represent taxpayers for audits only.

In Fiscal 2004, the number of criminal convictions almost doubled on fewer initiated investigations than the prior two years, with the average sentence running 19 months for tax evasion.

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